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The U.S. Citizenship and Immigration Services (USCIS) appeals panel ruled this week that visa petitions based on illegal employment contracts will be rejected—and, specifically, that L-1B petitioners intending to keep workers on foreign payroll must meet both federal and state minimum-wage requirements.

Key Points:

The case, Matter of I- Corp., involved a semiconductor manufacturing company seeking to temporarily employ a foreign worker on an L-1B visa in Oregon. The petitioner indicated that it would employ the worker for a two-year period, paying a wage of 43,445 Malaysian ringgits per year. At the time, that would have amounted to a salary of about $13,468 per year, or $6.47 per hour. The federal minimum wage was $7.25 per hour, and the Oregon state minimum wage was $8.95 per hour.

The Administrative Appeals Office (AAO) ruled that petitioners must meet both federal and state minimum wage requirements for petitions to be considered.

The AAO noted that while the Immigration and Nationality Act (INA) does not itself mention minimum wage requirements, USCIS cannot approve petitions that are based on contracts that violate federal or state labor law. “While wage laws are not expressly restated in the (INA), it is implied that authorized employment must comply with both the Act and the (the Fair Labor Standards Act),” the panel said. “Only when it sought to exceed FLSA protections has Congress included specific wage-related provisions” in the INA.

The case, which reached the AAO after the petition was rejected on unrelated grounds, was remanded to USCIS’s California Service Center to determine whether the employee would be paid the appropriate minimum wage under both federal and state law.

USCIS has formally adopted this decision, meaning the ruling establishes policy guidance that is binding on all USCIS employees.

BAL Analysis: The ruling makes it clear that petitioners must be prepared to meet the requirements of both federal and state minimum-wage laws, and it has potentially significant consequences for companies that file L-1 petitions with USCIS for workers who will remain on foreign payroll. USCIS has noted in past policy memoranda that what counts as “‘total compensation’ is fact-dependent, but may include, besides wages or salary, other guaranteed forms of payment made to an employee for services to be rendered for the petitioner” and that this compensation “may be paid in the form of money, a commodity, a service, or a privilege, including food, transportation and housing allowances, as well as guaranteed bonuses.” Those with any questions on minimum compensation requirements, including requirements as they related to the I-Corp case, should contact BAL.